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Subzero temperatures forecast to continue this morning from last night will put to the test the
region’s natural-gas and electricity systems.

American Electric Power expects electricity demand to exceed that of Jan. 6, the coldest day of
the most-recent cold snap. Columbia Gas says its demand will approach that of Jan. 6 but likely
fall just short. Both say they have the energy to meet customers’ needs.

Those companies, along with PJM Interconnection, are urging customers to turn down their
thermostats and take other steps to reduce usage.

“The wave of frigid weather is expected to push up demand for electricity to potentially
record-breaking levels, straining the capacity of the nation’s power grid,” AEP said in a statement
issued yesterday afternoon.

PJM, the company that manages the flow of electricity in a multistate region that includes Ohio,
said it expects demand to be highest this evening. It is asking people to conserve power from 6 to
10 a.m. today, and then from 5 to 9 p.m., which are the hours the grid will likely be under the
most strain.

This is the first time in years that Columbia has issued a request to conserve gas. The company
doesn’t know how much it will affect consumer behavior.

Small changes in consumer habits could make an important difference if energy demand is getting
close to eclipsing the supply. Dominion East Ohio, the gas utility for northeastern Ohio, has asked
consumers to conserve today and made a similar request before the Jan. 6 cold snap.

The company had expected its customers to use 2.3 billion cubic feet of gas in the 24-hour
period beginning on Jan. 6. Actual usage was 2.1 billion.

“That was one of the keys that helped us out earlier in the month, and we hope it will help us
out this time as well,” said Jeff Murphy, Dominion’s managing director for commercial operations.
His company is forecasting that customers will use 2 billion cubic feet today.

For some perspective, Dominion’s all-time daily high was 2.5 billion cubic feet in January 1994,
a time before many of the energy-efficiency advancements that have helped households and businesses
reduce their usage.

Columbia’s record also was set in January 1994, when customers used 2.6 billion cubic feet of
gas. Usage peaked at 2.5 billion cubic feet on Jan. 6 this year, according to preliminary figures.
Today’s forecast is 2.4 billion.

Regulators require that natural-gas utilities be ready for demand levels that have at least a
1-in-10 probability of occurring, said Mike Anderson, director of supply development for NiSource,
the parent company of Columbia Gas. For Columbia, the temperature needs to drop to an average of
minus 6 degrees over 24 hours to reach that 1-in-10 level.

“Our forecasts right now are slightly warmer than that” for today, he said.

If the temperature dropped lower than minus 6 on average for 24 hours, then Columbia would need
to take steps to obtain additional gas.

In many ways, Ohio is more prepared to deal with a tight gas supply than it was a few years ago,
said David Bellman, an independent energy consultant based in Columbus.

The big difference is the development of the Marcellus and Utica shale formations, which puts
the supply much closer than it was when the state got a larger share of its gas from the Gulf
Coast.

“We would definitely reach a crisis stage if this was five years ago,” Bellman said.

The abundant supply of shale gas has contributed to a drop in gas prices in the past few years,
which is one reason that electricity companies are building more gas-fired power plants.

One of the dynamics in the past month has been the dueling demands for gas for home heating and
for power plants.

The recent cold is one reason that the market price of natural gas surged this month to more
than $5 per 1,000 cubic feet, the first time it has hit that level since 2010. This is still well
below the highs of 2008, when the price exceeded $13.

AEP expects its Ohio electricity demand to peak at 8,225 megawatts this morning, which would be
the highest this month. The all-time winter high was 8,496 megawatts, in 2009.

The big change since 2009 is a drop in electricity use by large factories. If not for that,
today’s peak would likely exceed the one in 2009, said AEP spokeswoman Melissa McHenry.

Ohio electricity use tends to peak in July and August when people are running their air
conditioners. The winter peak is tied to the roughly 20 percent of households that heat with
electricity.

When electricity supplies are tight, PJM will ask certain large customers to reduce their usage,
a process called “demand response.” Companies will agree to answer this call in exchange for a
reduction in their electricity costs.

Ohio natural-gas companies do not have an equivalent of PJM and do not have a method of getting
large customers to reduce use if there is a supply crisis.